Wednesday July 2, 11:54 AM
Broker tips: EasyJet, Trinity Mirror, BT
LONDON (ShareCast) - Lehman Brothers (NYSE: LEH - news) has begun coverage on budget airline easyJet with an 'equal-weight' rating
and a 300p target price.Lehman, which has a 'negative' rating on the airline sector, said it has major short-term concerns about the rise in the fuel price. The broker said that easyJet's margins of around 10% in 2007 may not be sufficient to absorb a doubling in fuel costs, adding that it expects the company to move into loss in 2009. However, strong margins and a robust balance sheet will help the company survive the crisis, Lehman added. Citigroup (ASFZ.PK - news) has slashed its price target on Trinity Mirror (LSE: TNI.L - news) to 81p from 250p after the newspaper group's profit warning on Monday. Trinity Mirror, which publishes the Mirror and several local papers, expects full-year operating profits to be some 10% lower than previous forecasts as advertising market conditions continue to deteriorate. The broker keeps its 'sell' rating on Trinity Mirror. Citigroup has also lowered its rating on the Scotsman and Yorkshire post publisher Johnston Press (LSE: JPR.L - news) to 'sell' from 'hold' and cut its price target on the stock to 43p from 88p. While Citi cuts its target price on Daily Mail (LSE: DMGT.L - news) and General Trust to 500p from 600p, it keeps its 'buy' rating on the Daily Mail publisher. JP Morgan has raised its target price on the BT Group (LSE: BT-A.L - news) to 252p from 250p and kept its 'neutral' rating on the telecoms giant. While BT faces structural challenges, these are mostly known, the broker says. "We believe BT does face major structural challenges ahead, including pension issues, the transition to mobile and unbundling," JPM said. "However, we think that short term negative catalysts are largely factored into consensus forecasts, and that earnings are set to be boosted by fewer headwinds for the next couple of quarters."
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